For investors looking for strong dividend yields, master limited partnerships (MLPs) remain a powerful portfolio tool. After all, the corporate structure is designed to kick out large, tax-advantaged dividends to unit holders and the sponsoring general partners. Those high yields often average in the 5% to 8% range.
Yet, despite the sector’s long-term stability, there have been some major hiccups lately.
Analysts continue to question pipeline kingpin Kinder Morgan’s (KMP) cash flows and capital expenditure spending, while former industry stalwart Boardwalk Pipeline Partners (BWP) slashed its dividend payout by 80%. Shares of both KMP and BWP have plunged heavily over the last few weeks on the news.
Which is why going broad may be the best strategy for adding MLPs to a portfolio. There are now more than 18 different exchange-traded funds (ETFs) that focus on MLPs and their monster dividend yields. For investors, making a play on one of these funds could be the best way to gain exposure to the big yields, while avoiding potential dividend blowups.
Here are five of the best MLP ETFs yielding 5%-plus.